What will $2 trillion in "dry powder" mean for private equity funds in 2019?

Meeting return requirements is a significant concern for a number of private equity managers who have lowered their target returns to reflect the high amount of dry powder allocated to the asset class and predictions that there will be a market correction in 2019.

Should the market enter a downturn however, this should serve the secondary market well by offering opportunities to re-balance portfolios and purchase new assets should discounted shares become available. Meanwhile, managers are perceptively boosting their coverage of high-growth sectors such as technology, fintech and biotech creating increasingly diverse portfolios less exposed to the uncertainty of specific markets.

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In January, Preqin estimated that there is a record $2 trillion in “dry powder”, or unspent money, in private funds globally, with over $1.2 trillion of that total $2 trillion being earmarked for private equity.